May 18 (Reuters) - Wall Street’s industry-funded watchdog has fined Raymond James Financial Inc $17 million for widespread failures in anti-money laundering compliance, the regulator said on Wednesday.

The Financial Industry Regulatory Authority (FINRA) also suspended the company’s former anti-money laundering compliance officer, Linda Busby, for three months and fined her $25,000, the regulator said.

The fine is the regulator’s largest ever for anti-money laundering compliance violations, said FINRA spokeswoman Michelle Ong.

Raymond James and Busby both agreed to the sanctions in settlements with FINRA, without admitting nor denying FINRA’s charges, FINRA said.

Raymond James’ processes to prevent money laundering did not match its business growth from 2006-14, FINRA said. Instead, the company relied on a “patchwork” of procedures and systems to detect suspicious activity.

As a result, the firm missed certain “red flags” in the process and failed to investigate others, FINRA said. Those included a $250,000 wire transfer to a Panamanian bank account - purportedly for a banana shipment - that followed previous account activity purportedly related to gold mining, according to the settlement.

The Raymond James U.S. anti-money laundering program has “undergone significant resource, process and technology enhancements” aligned with the firm’s growth strategy, Steve Hollister, a Raymond James spokesman, said in a statement.

The firm has boosted its anti-money laundering staff, hiring a new chief anti-money laundering officer, and is using a new monitoring software to detect suspicious activity, Hollister said. Raymond James has also begun the process of exiting its U.S. third-party foreign correspondent business, excluding operations in Europe and Canada, Hollister said.

FINRA, during its investigation, had found among other things that Raymond James failed to conduct mandatory due diligence reviews for foreign financial institutions to whom it provided services.

Busby left Raymond James last year, after 11 years with the firm. She is not presently employed in the securities industry, according to a regulatory filing. Lawyers for Busby could not be immediately reached for comment.

Raymond James’ failures were “particularly concerning,” given that FINRA had sanctioned the firm in 2012 for inadequate anti-money laundering procedures, the regulator said on Wednesday.

At the time, Raymond James had agreed to review its program and procedures, and certify that they were reasonably designed to achieve compliance, FINRA said. (Reporting by Suzanne Barlyn; editing by Jeffrey Benkoe and G Crosse)